A Doe Deal

The U.S. Department of Energy (DOE) awarded RS Information Systems Inc. (RSIS, No. 24 on the 2002 BE INDUSTRIAL/ SERVICE 100 list with $146.5 million in revenues) a $409 million contract—one of the largest ever awarded to a small business.
Small businesses, as defined by the federal government, are those with fewer than 1,500 employees. According to Rodney P. Hunt, president and CEO of RSIS, his firm has fewer than 1,400 employees. Under the contract, RSIS will provide a slew of services to the DOE, including enterprise architecture, cyber-security, telecommunications, network infrastructure, systems design and engineering, help desk support, software applications, and Web design. Services will focus on the following areas:

Security—computer and Internet-related security

Network engineering—local and wide area network connectivity and server support

Enterprise architecture and engineering—helping the DOE lay out its road map of how to maximize information technology to improve business processes

The contract is expected to have a significant impact on revenues, which totaled $190 million for 2002 and is expected to total $260 million in 2003. Hunt estimates the contract’s value at $80 million to $100 million a year over the next five years. RSIS has committed to do 55% of the work directly, with the remainder passed down to smaller subcontractors.

Though many technology firms have been struggling for the past two years, Hunt says business has been solid because 95% of the company’s revenues come from the federal government, with the remaining 5% coming from commercial clients. “When the telecom industry really went south, most of it was with commercial projects that were short-term in nature, and [companies] were refreshing their equipment all the time just chasing the [new] technology. I think the market was oversaturated with the technology,” says Hunt. “I tell my friends all the time who [concentrated on commercial projects], you might have made 15%, 20%, 30% for two years but I’ll be able to make 10% or 12% [profit] margins with a customer who may pay slow but always pays and that’s Uncle Sam. So the longevity is there.”

Hunt is looking for future revenue growth, despite the fact that RSIS graduated from the 8(a) designation program in January. The company has $700 million in backlog projects (not including the DOE contract) with agencies such as the Federal Aviation Administration, the U.S. Department of Housing and Urban Development, and the National Weather Service.

Hunt hopes this pipeline will help propel RSIS into the upper echelon of the BE 100s. “We’re hoping to break into the top 10 this year,” he says. “I don’t know if we’ll do it, you never know who grew.”